A Copperbelt based businessman Joseph Chilinda has told the Kabwe High Court that KCM liquidator, Milingo Lungu, bought his company, Cashfin Zambia Ltd, for US$500,000 and promised to pay through a procurement tender from Konkola Copper Mines.
This is a matter in which four individuals have dragged Cashfin Zambia Limited owners, Chilinda and Convex Equity Limited, to the Kabwe High Court, seeking a declaration that businessmen Jason Kombo and Dingiswayo Ndhlovu are the rightful shareholders of Cashfin Zambia Limited, following a purchase transaction.
But Chilinda has told the court that it is KCM liquidator, Milingo, who bought his company and not the people who have gone to court claiming ownership of Casfhin.
Two days ago, News Diggers reported a scandal at Konkola Copper Mines (KCM) in which the mining giant has paid US$1.6 million (about K32 million) to a company allegedly bought by liquidator Milingo Lungu through his relative Dingiswayo Ndhlovu, for the supply of Heavy Fuel Oil (HFO).
The newspaper also reported that PF cadres were up in arms fighting for the ownership of Cashfin, the company that has received the US$1.6 million from KCM.
According to KCM sources close to the liquidator, Milingo approached Chilinda, a known PF cadre, asking to buy his company, which he allegedly used to syphon money for a purported consignment of HFO, that was not delivered.
The sources narrated that after buying the company through his relative (Ndlovu), Milingo processed a full payment of US$1.6 million in one day, before his relative withdrew US$1.1 million and paid it to unknown third parties.
But in a statement, published by the Daily Nation, one Laston Mumba, claiming to be the resident director of Cashfin, said neither Ndlovu nor Milingo was the beneficial owner of the company.
“As Cashfin Zambla Limited, we wish to reply and rebut the several inaccuracies and untruths in the [News Diggers] story. The story is unresearched, unverified, unethical and quite simply in bad taste. Cashfin Zambia Limited was awarded a contract to supply 2000 tonnes of Heavy Fuel Oil on merit after demonstrating that we had capacity to meet the order. We were awarded the contract at a time when there was a critical shortage of HFO on the market owing to the prolonged closure of Indeni Refinery. Indeed, the shortage is still persistent to date. The order was granted at a time of movement restrictions because of COVID-19 related lockdowns. In addition, most Zambian based transporters were unwilling to pick up the product because of fear of attack on their drivers. Despite these challenges we have successfully managed to discharge our obligations on the agreement. Neither Mr. Milingo Lungu nor Mr. Dingiswayo Ndhlovu are the beneficial owners of Cashfin Zambia Limited. The beneficial owner of Cashfin Zambia Limited is Jack Robert Kombo, a Zambian citizen resident in South Africa,” read the statement.
Meanwhile, according to the court records which were availed to News Diggers, Tuesday, Milingo’s relative, Ndlovu, is one of the petitioners who have sued Chilinda, claiming ownership of the company.
THE CLAIM OF COMPANY OWNERSHIP
Kombo, Ndhlovu, Musonda, Mumba and Cashfin Zambia Limited as plaintiffs have sued Chilinda, Convex Equity Limited and Stanbic Zambia Limited as the defendants.
The plaintiffs are seeking an order to Chilinda and Convex Equity Limited to execute deeds of transfer of shares in Cashfin Zambia Limited to Kombo and Ndhlovu, and that in default, an order that the Registrar of the High Court executes share transfers in Cashfin in favour of Kombo and Ndhlovu.
They also want an injunction restraining the defendants from interfering with the operations of Cashfin Zambia in any manner whatsoever.
In their statement of claim, the plaintiffs stated that Kombo was the beneficial owner of 99 percent shares in Cashfin Zambia while Ndhlovu was the beneficial owner of 1 percent of the said company.
They added that Musonda was a businessman resident in Ndola and holding a power of attorney on behalf of Kombo.
The plaintiffs further stated that Chilinda was a former beneficial holder of 95 percent shares in Cashfin Zambia, while Convex Equity was the former beneficial holder of 5 percent shares in the company.
They stated that by an agreement made on June 1, 2020, between Chilinda and Convex Equity and Kombo and Ndlovu, the defendants agreed to sell and Kombo and Ndhlovu agreed to purchase 100 percent shares in Cashfin Zambia at a price of US$10,000 to be paid in two equal instalments with the first due on agreement to sell and the final instalment due on completion.
“Pursuant to the agreement, Kombo acting through Musonda paid the first instalment of US$5,000 to Chilinda on June 1, 2020 and thereafter, the second instalment of US$5,000 was paid on June 30, 2020 to an account belonging to Epitome Investment Limited,” read the claim.
The plaintiffs stated that in light of the above, Chilinda surrendered the original copies of the company’s certificate of incorporation, certificate of share capital and license to buy, distribute and export petroleum products.
They added that further to the said agreement, Chilinda was required to change signatories on Cashfin’s accounts pending the transfer formalities.
The plaintiffs stated that therefore, Chilinda signed a mandate for the second defendant to be the sole signatory on all Cashfin’s accounts held with Stanbic Zambia Limited.
They stated that upon full payment of the purchase price to Chilinda and becoming beneficial owners of Cashfin, the plaintiffs (the four individuals) secured an order to procure and supply 2000 tonnes of Heavy Fuel Oil (HFO) to KCM in Chingola at a total cost of US$1,600,000.
The plaintiffs stated that the proceeds for the said procurement and supply of the oil were paid into Cashfin’s account held at the Ndola Branch of Stanbic Zambia Limited.
They stated that on August 4, 2020, Ndhlovu was informed that his access to the said account was blocked by Stanbic on account that Chilinda had written to them asking to change signatories on the grounds that he was unaware on the whereabouts of Ndhlovu.
But in their defence, Chilinda and Convex Equity Limited denied having any transaction or dealings with Kombo and Ndhlovu relating to the sale of 100 percent shares in Cashfin Zambia Limited, adding that no agreement was ever discussed or negotiated and entered into between the said plaintiffs and the defendants.
Chilinda stated that he was and still is the beneficial owner of 95 percent shares in Cashfin whereas the remaining 5 percent belong to Convex Equity Limited.
“The subject defendants aver that they do not know the said plaintiffs and have never met them in respect of the alleged agreement or howsoever else,” read the defence.
Chilinda stated that the individual he discussed the sale of shares in Cashfin Zambia Limited with was Milingo Lungu who paid a deposit of USD10,000, leaving a balance of USD490,000, out of the USD500,000 consideration for his (Chilinda’s) 100 percent shares, being 95 percent shares in the said company.
“The individual the first defendant (Chilinda) discussed the sale of shares, in Cashfin Zambia Limited, with is one Milingo Lungu and that the context of discussion and negotiation between them was as follows; the first defendant was going to sell his 100 percent shares in Cashfin Zambia Limited (being 95 percent shares) to the said Milingo Lungu at a total consideration of USD500,000. Milingo Lungu was going to pay a deposit payment of USD10,000. The balance payment of USD 490,000 was going to be paid in cash or Milingo Lungu was going to facilitate the registration of the first defendant’s other company (Epitome Investments Limited) as a supplier of goods and services with Konkola Copper Mines Plc (in liquidation),” read the defence.
Chilinda stated that upon registration, Milingo was going to facilitate the provision of business/orders by KCM to his (Chilinda’s) said company the balance consideration of USD490,000 by way of payment thereof.
He added that in default of the above provision of order/business, Milingo was going to pay the said balance in cash to him.
“The first Defendant was going to open a bank account in the names of the second defendant. The first defendant was going to sign a resolution appointing Milingo Lungu’s proxy as signatory to the account. A formal share sale agreement was going to be signed spelling out the full terms and conditions of the sale,” read the defence.
“The first defendant avows that for the reasons above said he did not receive any payment from the first plaintiff (Kombo) (whom he did not have any dealings or contract with) by proxy or otherwise and avers that the payment he received from the third plaintiff (Musonda) was a payment by the said Milingo Lungu and the said payment was in consequence of various verbal (inter face and telephonic) discussions between the said Milingo Lungu and the first defendant.”
Chilinda admitted receiving the second payment of USD5,000 by way of deposit or transfer into the account of Epitome Investments Limited, but, however, added that the said payment was made by the said Milingo Lungu by himself or his proxy following WhatsApp communication with him.
He stated that it was the said Milingo Lungu’s condition for the payment of the deposit sum that the said documents should be held in his custody as security pending completion of the transaction.
Chilinda however, admitted that Ndhlovu was removed as signatory to the account for the reason that the said Milingo Lungu had failed, neglected or refused to complete the transaction as contemplated, discussed and negotiated between the two of them.